ATAR Notes: Forum

General Discussion => General Discussion Boards => Lifestyle and Entertainment => Topic started by: Joseph41 on July 14, 2018, 12:28:31 pm

Title: How is our generation meant to get into the property market?
Post by: Joseph41 on July 14, 2018, 12:28:31 pm

There may very well be a thread on this already; if I find one, I'll merge this into the existing one.

I'll be moving out soon, and will, ostensibly, be renting. But the thought of, y'know, owning a property (or more than one property!) seems wildly out of reach at the present time. I know that for, say, my parents' and grandparents' generations, owning a property at a young age was pretty common - but the market is so different these days.

I guess I have a few questions.

1) Do you intend to own a property, or rent indefinitely? If the former, how?
2) Do you think we'll just need to make compromises in terms of expectations and where we live?
3) Is my predicament due to all of my smashed avo?

Title: Re: How is our generation meant to get into the property market?
Post by: EEEEEEP on July 14, 2018, 12:40:27 pm

Quote from: Joseph41 on July 14, 2018, 12:28:31 pm

There may very well be a thread on this already; if I find one, I'll merge this into the existing one.

I'll be moving out soon, and will, ostensibly, be renting. But the thought of, y'know, owning a property (or more than one property!) seems wildly out of reach at the present time. I know that for, say, my parents' and grandparents' generations, owning a property at a young age was pretty common - but the market is so different these days.

I guess I have a few questions.

1) Do you intend to own a property, or rent indefinitely? If the former, how?
2) Do you think we'll just need to make compromises in terms of expectations and where we live?
3) Is my predicament due to all of my smashed avo?

1) I intend to own a property, but only after I get a really good income (god... the medium house price in Sydney is crazy ridiculous... 750- 800k)

Spoiler

(https://i.imgur.com/96lN6en.png)

2) Definitely! Houses close to the city are insanely over the top expensive, but if you travel out 30 or 35 km more, you get shave 100 -200k off the price =)

3) maybe ;), ;),

Title: Re: How is our generation meant to get into the property market?
Post by: S200 on July 14, 2018, 12:46:37 pm

Quote from: Joseph41 on July 14, 2018, 12:28:31 pm

I'll be moving out soon, and will, ostensibly, be renting. But the thought of, y'know, owning a property (or more than one property!) seems wildly out of reach at the present time. I know that for, say, my parents' and grandparents' generations, owning a property at a young age was pretty common - but the market is so different these days.

I guess I have a few questions.

1) Do you intend to own a property, or rent indefinitely? If the former, how?
2) Do you think we'll just need to make compromises in terms of expectations and where we live?
3) Is my predicament due to all of my smashed avo?

1.) Yes, when I have been working for a few years. Just will have to live with the mortgage I guess...

2.) My house design has changed a bit over the years.

3.) Nice "Salty" reference... :) But as I am not part of the feta fetish, I can't say it's true for me.

Title: Re: How is our generation meant to get into the property market?
Post by: dcesaona on July 14, 2018, 01:12:17 pm

I might be an idealist rather than a realist but my solution is to move country  ;D Okay, maybe not but it sounds fantastic
Houses in Paris are far cheaper than houses in Sydney, and far prettier and grander too

Title: Re: How is our generation meant to get into the property market?
Post by: Poet on July 14, 2018, 01:59:34 pm

You're right, the market has changed drastically, even in the past ten years. Along with inflation and current property values close to cities, it's been estimated that the majority of Australians will be renting/not able to afford their own property ever before 2050. It's ridiculous.

So,
1) I don't think I'll ever want to really settle down in one spot (nomadic lifestyle, yeh boi), and unless I change my mind on what I want to do with my life, I doubt I'll ever be able to really afford my own property. (Perks of being a spontaneous person).
It's nice to have familiarity, however as someone who prefers to live alone/with a partner but no kids, it wouldn't really make much sense to buy a property. Rental contracts for a couple years at a time, then time to move on until I get old and find a place to settle, I guess.
There will be some people who prefer permanent housing, but renting is just easier.

2) As long as you come with no expectations, you don't need to compromise. Adventure is out there, as they say.

3) I'm going to stop you there. Smashed avo is the reason for living. I will not hear it belittled in such a casual manner.

It'll be really interesting to come back to this in ten years and see where we all end up, hey. :)

Title: Re: How is our generation meant to get into the property market?
Post by: Joseph41 on July 14, 2018, 02:05:31 pm

Quote from: secretly_a_poet on July 14, 2018, 01:59:34 pm

It'll be really interesting to come back to this in ten years and see where we all end up, hey. :)

Imagine how many posts jamonwindeyer will have by then!

Title: Re: How is our generation meant to get into the property market?
Post by: Orb on July 14, 2018, 09:14:08 pm

1) Own, very lucky to have a job in an industry with enough growth prospects after graduation that i'll be able to own one shortly and fully pay the mortgage in 5-10 years.

2) Definitely for me (eg. Toorak with it's $4.4million median house price is definitely a ridiculous area to try to fully buy one, at least initially).

3) Cutting costs is definitely important (eg. probably don't need those Louis Vuitton wallets or Supreme hoodies) but imo life is too short to be too constrictive!

 

 

Title: Re: How is our generation meant to get into the property market?
Post by: sarangiya on July 15, 2018, 09:23:42 am

For anyone wondering about how to purchase they're first home, I thought I would pass on some information I have squirreled away during my finance obsession this year.

the First Home Owners Grant
Most people know what this is already. Here are some key points:
• Currently until 2020, for a house valued at under $750,000 you can:
> Receive a $20,000 grant towards the if the house is in a regional area, or
> $10,000 in a metropolitan area.
• You must live in the home for at least twelve months
• You must pay stamp duty
> Though, there are concessions that you may be eligible for when buying your own home.
You might use this grant towards the deposit on your home purchase. But, if you are purchasing a house valued at $400,000 in a regional area, a $20,000 deposit is only 5% of the total price. This subjects you to the Lenders Mortgage Insurance, which insures your bank financially should you need to default on your loan and the resale of your home doesn't cover the money borrowed. Essentially, it is an unnecessary expense that if possible, should be avoided.
How can you make up that $60,000 difference, though?

the First Home Super Saver scheme
How are you going to save money for a deposit? Most people aren't familiar with securities investment, and a return of 2.5% in interest at your bank in isn't going to get your numbers growing very quickly. You'll also get taxed on your savings, and frankly, probably tempted to blow them.
Lucky for you, you may already have an investment portfolio earning you 7-10% return every year. Your superannuation.
Here are some dotpoints:
• You can contribute up to $30,000 to your super and access it after by:
> Making before tax contributions ("salary sacrifice" negotiated with your employer) to your superannuation. 85% of these contributions can be claimed
> or, after tax contributions (deposits). 100% of these contributions can be claimed
• You are also entitled to the interest return on the money you deposited. (E.g. $30k*1.095 (net return 9.5%)=$32,850)
• You can't touch it until you actually purchase a home

So, to contribute before, or after tax?
Before-tax contributions
You'll never see this money grace your bank account, so it is a good idea for those of us with lesser self control. It also is an attractive tax dodge, because tax paid on savings (in a bank, for example) is higher than Super savings.
You'll only be able to access 85% of these though, meaning you might have to save more or for longer. When withdrawing these contributions, you will also be taxed.

After-tax contributions
You'll be able to get back 100% of these contributions. Better yet, if you are a poor University student earning under $37k/year after tax (there is also a higher bracket that is eligible). The government will match every dollar you contribute by 50c up to the value of $500 per year. (E.g. you add $1000, the government helps out with $500). These "co contributions" are in effect a tax dodge and well, who doesn't like seemingly free money? You also won't be taxed again upon claiming the funds. But, it might be hard to put away your pay check. The money is also subject to tax, of course.

Regardless of whether you are making voluntary contributions, low income owners (<$37k) also get a super tax offset every year from the government. It is 15% of the total balance, up to the value of $500.

The take home message? Get a low-fee super fund account and begin saving for a deposit that way. You can get """freebies""" from the government, reduced tax and a hefty return that most private investors would struggle to make. Better yet, the money isn't touchable and it will prepare you for long term saving too (making voluntary contributions to your super is good regardless of whether you're buying a house!)

Anyway hope this interests a few people! Happy property 😂

Title: Re: How is our generation meant to get into the property market?
Post by: spectroscopy on July 15, 2018, 10:29:08 am

i dont think now is a good time to get into property tbh just based on macroeconomic factors.  besides all the new regulations the federal government have implemented to curb property prices, there is essentially 0 ambiguity that the next australian cash rate decision will be up, and with global economies already seeing inflationary pressures and the fed reserve having begun a hiking cycle, I definitely dont think now is a good time to buy. sydney prices have dropped 3.7% this financial year and in melbourne they have gone down 2.3%. we probably wont see a sharp drop any time soon but it will continue to ease off. the only area that might be worth having a look at might be inner city apartments (sydney people please ignore this, apartments are still super expensive there). But the cyclical stop start nature of apartment building has resulted in the current situation whereby so much apartment development is in the pipeline there is a massive oversupply coming onto the market and this coupled with the curbs on foreign investors in australian property (chinas anti-graft campaign, vacant residence tax, etc.) has meant that alot of apartments being sold of the plan are coming onto the market really cheap and 2-3 year old apartments are also getting quite cheap too. if you're in your mid-late 20's in a long term relationship (2 incomes) and no kids coming for 5 years + you work in the city, then spending ~400k on a nice 2 bedroom apartment in the CBD starts to look like the only semi-realistic option if you want to get into the property market. If you look at the market very often you see some great deals pop up in the city (though they often get snapped up pretty fast). Much of the good value is in buying off the plan but again it can be hard to bring yourself to do it because a) the apartment isnt even built yet and b) they have a track record of losing 20% of their value as soon as you sign the dotted line. But if you see something you like and its priced fairly it may be the only option, and developers are starting to get quite desperate to make sales now offering crazy good conditions to buyers (really good developer financing, lots of free extras, discounts on hard to sell apartments (obstructed view etc.)).  I would recommend anyone who is slightly interested to regularly check realestate.com.au and see what the market looks like over time